Is a college education a good investment?

Wednesday

May 2, 2012 at 12:01 AMJun 29, 2012 at 11:10 AM

The April 29th issue of Bloomberg Business Week portrayed Arkansas in a negative sense as pertains to receiving a degree from the state’s public universities. According to this article Arkansas was the only state that had a negative ROI (Return on Investment) for those obtaining a college degree.

Jerry Jackson/ Not Quite A Native

The April 29th issue of Bloomberg Business Week portrayed Arkansas in a negative sense as pertains to receiving a degree from the state’s public universities. According to this article Arkansas was the only state that had a negative ROI (Return on Investment) for those obtaining a college degree.
According to Bloomberg they surveyed the average 30 year earnings of college grads and compared that with the average earnings of high school grads. After considering the cost of obtaining the college degree, they maintain in Arkansas you would be better off financially by going to work right out of high school.
There are many questions to as to how this information was obtained – especially for graduates as long as 30 years ago and was it by word of mouth or documented information. The size of the sample and the reliability of the information are questionable at best. It is doubtful it qualifies as an empirical study.
It does, however, raise the question that many people are asking within the educational community and in the general public. Is a college education and advanced degrees a good investment financially and what other benefits are received by a degree in higher education? The other benefits are numerous and even those who are questioning the financial issue will probably agree many benefits are received that lead to a higher quality of life.
I discussed these issues and the Bloomberg article with Chris Boyett, Vice Chancellor for ASU-Heber Springs and Fran Hart, Director of Publication. They are both keenly aware of these issues and I believe are diligently working to see the students in this area are getting their money’s worth by attending ASU-Heber.
Tuition costs at the Heber campus are 73 dollars per hour.
If a student carries a normal load of 15 hours, the semester costs for tuition are slightly under $1,100 per semester. Since virtually all students live in this area, there are no extra costs for room and board. This two-year ASU Heber center is much more oriented to fulfilling practical needs in addition to preparing them for studies at a four year college or university. Examples of practical needs are courses in welding, basic accounting and a program for practical nursing.
It is my opinion ASU in Heber works hard to provide quality and practical education and does so with minimum cost. The extras or frills such as research, sabbaticals and professors who have light teaching schedules just don’t fit in to the “education product” produced here. Unlike many two year and four year colleges, students at ASU Heber have experienced only moderate increases in tuition. From 2008 through 2012 tuition cost increases have averaged about 3 percent annually.
The lottery scholarships have affected many college students and prospective students. A disturbing statistic is that 40 percent of lottery scholarship recipients don’t continue after the first year. This again raises questions as to whether a large number of these students should be in college and is it a good investment for both the students and the scholarship program.
Chris Boyett expresses a strong belief, which seems to be well founded, that a lottery scholarship for a two year program such as Heber of $2,250 is more valuable than a $4,500 scholarship for a four year institution. His belief can be verified when the annual cost at a four year college can easily be 6 to 8 times the amount required at ASU Heber. As Mr. Boyett explains this obvious point escapes many students when they measure a $4,500 scholarship to one that totals $2,250.
Student loans, which program is controlled 100 percent by the federal government, affects millions of college graduates and those that attend but don’t graduate. Unless congress acts the interest rates on these loans will double this July from 3.4 percent to 6.8 percent. This would make the repayment of these loans even more difficult. At this point President Obama says he would veto legislation to reduce the interest rate.
As the Bloomberg article points out the worst situation is for a student to take out a large student loan, then quit before attaining a degree, go to work in a low earning field and be saddled with a debt with little proceeds for loan pay back.
Numerous interviews with graduates and students indicate that many colleges and universities do not provide sufficient counseling on the responsibilities and potential problems on student loans. Some students don’t realize these funds must be paid back with interest and they are not like Pell grants where no pay back is required.
My own belief, not necessarily shared by Boyett and Hart, is that colleges and universities as an entire entity have not done a good job in controlling costs. When the overall cost of living and salaries and wages have increased at an average rate of 2 to 4 percent, why have tuition costs increased 600 percent in the last three decades?
The cost now for four years is $32,000 plus for state universities and $83,000 for private schools.
Why should colleges be exempt from cost controlling issues when the real world (except for governments) is under pressure to make certain money expended for goods and services makes economic sense? College administrators and the governing boards can increase tuitions at alarming rates knowing that student loans, government Pell grants and sacrificing by relatives will provide the funds.
My conclusion is we must be wary of taking out big student loans on the anticipation that the college degree itself will assure you financial success. The other conclusion is that a two year program at ASU Heber may be a reasonable investment and can be a stepping stone to further education or a basis to enter the work force without an overwhelming student debt.